We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like China Biologic Products Inc (NASDAQ:CBPO).
China Biologic Products Inc (NASDAQ:CBPO) has experienced an increase in enthusiasm from smart money recently. Our calculations also showed that CBPO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are a lot of formulas stock market investors use to size up publicly traded companies. Two of the most underrated formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outperform the S&P 500 by a significant margin (see the details here).
Lei Zhang of Hillhouse Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the recent hedge fund action encompassing China Biologic Products Inc (NASDAQ:CBPO).
Hedge fund activity in China Biologic Products Inc (NASDAQ:CBPO)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 56% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CBPO over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Lei Zhang’s Hillhouse Capital Management has the number one position in China Biologic Products Inc (NASDAQ:CBPO), worth close to $314.9 million, accounting for 4.3% of its total 13F portfolio. The second largest stake is held by York Capital Management, managed by James Dinan, which holds a $120.4 million position; 5.6% of its 13F portfolio is allocated to the stock. Other peers with similar optimism comprise Manoj Jain and Sohit Khurana’s Maso Capital, Matthew Halbower’s Pentwater Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Maso Capital allocated the biggest weight to China Biologic Products Inc (NASDAQ:CBPO), around 9.19% of its 13F portfolio. York Capital Management is also relatively very bullish on the stock, setting aside 5.58 percent of its 13F equity portfolio to CBPO.
Consequently, key money managers have been driving this bullishness. Hillhouse Capital Management, managed by Lei Zhang, assembled the most outsized position in China Biologic Products Inc (NASDAQ:CBPO). Hillhouse Capital Management had $314.9 million invested in the company at the end of the quarter. Matthew Halbower’s Pentwater Capital Management also made a $9.6 million investment in the stock during the quarter. The following funds were also among the new CBPO investors: Noam Gottesman’s GLG Partners, Paul Marshall and Ian Wace’s Marshall Wace, and Benjamin A. Smith’s Laurion Capital Management.
Let’s check out hedge fund activity in other stocks similar to China Biologic Products Inc (NASDAQ:CBPO). We will take a look at Pinnacle Financial Partners (NASDAQ:PNFP), Companhia Siderurgica Nacional (NYSE:SID), Littelfuse, Inc. (NASDAQ:LFUS), and Sabra Health Care REIT Inc (NASDAQ:SBRA). All of these stocks’ market caps are closest to CBPO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNFP | 15 | 84557 | -3 |
| SID | 7 | 18261 | -3 |
| LFUS | 18 | 270623 | 3 |
| SBRA | 10 | 99601 | 0 |
| Average | 12.5 | 118261 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $505 million in CBPO’s case. Littelfuse, Inc. (NASDAQ:LFUS) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 7 bullish hedge fund positions. China Biologic Products Inc (NASDAQ:CBPO) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately CBPO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on CBPO were disappointed as the stock returned 1.9% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
